Stake Holder value is an accounting concept that is based on the idea of creating maximum returns for all the stake holders involved in a business.
Concept of Stake Holder Value
The concept of stake holder value is different than that of share holder value where all the efforts are taken to increase the return for the shareholders or the inventors of the business. Stake holder value concept also involves the maximum return for the shareholders of the business but it also involves a number of other stake holders of the business such as employees, suppliers, surrounding communities, customers and the government.
Activities in Stake Holder Value
There may involve a number of different activities in the stake holder value concept such as making charitable contributions for the social society, maximizing the benefits and wages for the employees, taking initiatives for the betterment of surrounding environment, enhancing the employee benefit plan, absolute and transparent taxpaying to the government and maximizing the resource usage for the betterment of employees.
How to manage Stake Holder Value
Sometimes the steps taken to maintain or increase the stake holder value actually results in decreasing the profit of the business. However business may recover from that loss by increasing the good will in the community and society in such a way that this result in an increase in the sales of the business. The management views and implements the stake holder value concept on merit so that it can build a support in community or among the investors to provide the business with financial assistance if the profit of the business declines.
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